Introduction to contingency approach
Contingency Approach also knows as
situational approach. In 1980s, it is recognized as a key to effective
management. This approach accepts the dynamics and complexities of the
organization structure. An organization is affected by its environment and
environment is composed by physical resources, climate, persons, culture,
economic and market conditions and their laws. This approach argues that
there is no one universally applicable set of rules by which to manage organization.
If we look around we will notice
that we live in a world in which change is the only certainty. Change in
technology, social environment, economic and political environment,
globalization and ecological well being are making us rethink the way we are
adapting to change. If we fail to understand change, it is difficult to control
it. This applies to organization, as organizations are part of our environment.
Managing this change requires a new kind of approach and analysis both by
individual and the organization.
In a stable competitive environment
a relative simple and mechanical organization is enough for success. But in a
rapidly changing and unpredictable environment, success requires organization
to be flexible, dynamic and have the ability to renew itself and capacity to
innovate. The theory of management should visualize and incorporate this
reality in its premises. This introduces us to the Contingency Theory of
Management.
While all other theories float over
the passing currents of fleeting times, each its phase with unique and distinct
characteristics and like bubbles on the waters of a pond, tend to vanish after
a while to give place to a new setting, , the Contingency Theory of Management
alone stands firm like a rock unperturbed by changes in the environment. This
is because contingency theory accepts social and environment change in people
and their business ventures as its axiomatic value and postulates its canons
keeping in its view this pragmatic ground rule, while other theories are
inspired by situational ambience that prevails over the particular period in
history of management thought and tend to hold this as permanent and universal,
true and to remain applicable for all times to come, for application to
everyone, and for everywhere.
Origin & Development of
contingency approach
The Contingency approach is the outcome of research studies
conducted by Tom Burns, G.W.Stalker, John Woodward, Lawrence, Lorsch and
others. Through their analysis they co-related the structure of an organization
to the surrounding environmental conditions. In the Fifties of the last century
Burns and Stalker (both from UK) analyzed the environments and structures of
several British and Scottish firms. In their pioneering work "Management
of innovation" (1968) and they identified two types of organizational
structures-
- Mechanistic, and
- Organic;
Against two categories of environment -
- Stable, and
- Dynamic.
Their studies revealed that mechanic structure was found to
be common in organizations operating in stable environment, while the
organizations operating in dynamic environment tended to be organic in
structure.
During the Sixties John Woodward (also from UK) analyzed the
influence of technology on the organization structure of about 100 industrial
firms in the UK and observed that the type of technology used like unit or
small batches, mass or large batches, and continuous process of production
through single/double shifts directly affected the span of control, use of
committees, participative decision making and other structural characteristics.
Other researchers like Lawrence and Lorsch (USA) through
their studies brought out (1969) that organizations functioning in a complex
environment adopted a much higher degree of differentiation and integration
than those operating in simple environment. As per these two management
thinkers the key issue is environmental uncertainty and information flow. They
advocated to Focus on exploring and improving the organization's relationship
with the environment, which characterized by along a certainty-uncertainty
continuum.
Elaborating this theory in their treatise "Organization
and Management of Health Care"(Main Contributor: Katie Enock, Public
Health Specialist, Harrow Primary Care Trust - www.healthknowledge.org.uk) it is
stressed that there is no 'one best way' to structure an organization. An
organization will face a range of choices when determining how it should be
structured. Successful organizations adopt structures that are an appropriate
response to a number of variables, or contingencies, which influence both the
needs of the organization and how it works.
Overall Contingency theorists have found that three
contingencies are particularly important in influencing an organization’s
structure. These are:
its size
the technology it uses
its operating environment.
Implications
of contingency theory
if there is no 'one best way', then
even apparently quite similar organisations, for example, two nearby colleges,
may choose significantly different structures and still survive, be reasonably
successful in achieving their missions, and so on
if different parts of the same
organization are influenced in different ways by the contingencies bearing upon
them, then it may be appropriate for them to be structured differently, for
example, one university department may have a functional structure, whilst
another may have a matrix structure
Popular
contingency variables
Organization size: As size increases, so do the problems of
coordination.
Routine-ness of task technology: It
requires organizational structures, leadership style and control systems that
differ from customized technology.
Environmental uncertainty:
Environmental changes influence the management process, it being rapidly
changing and unpredictable.
Individual differences: Each one is
different in terms of their desire for growth, autonomy, tolerance of ambiguity
and expectation and accordingly managers select motivation techniques style and
designs
Basic principles of contingency
theory
Management
is essentially situational. Consequently the techniques of management is
contingent on the situation. If it properly conforms to the demands of the
environment, the technique is effective and fruitful. In other words the
diversity and complexity of the external situation with which the organization
interacts alone should determine which measure or technique is to be chosen to
be effective.
Management
should therefore adopt its approach and strategy in tune to the requirements of
each particular situation. Management policies and practices that spontaneously
are responsive to environmental changes alone would be effective. To meet this,
the organization should design its structure, leadership style, and control
systems should all be oriented to the situation prevailing.
Since
management effectiveness and success are directly related to its ability to
cope up with the environment and to the changes overtaking therein, it should
sharpen its diagnostic skills to be proactive and to anticipate and comprehend
environmental changes.
In
short the successful manager should recognize that there is no one best way or
thumb rule to manage. They must not consider particular management principles
and techniques as applicable to all time and all needs. There are no solution
of universal applicability, as two situations may not be identical.